The gist is that the Gulf states, China, Russia, Japan and France plan to stop using the U.S. Dollar for oil transactions beginning in 2018. The dollar will be replaced by a basket of currencies that will include the Japanese yen, the Chinese yuan, the euro, gold and a new unified currency that will be introduced for all the Gulf Arab states. Brazil and India have shown interest in participating in such a transition.

This transformation will be a pretty big blow against the value and supremacy of the U.S. Dollar.

I subtitled this post "Good news for gold" because the article also states:

The transitional currency in the move away from dollars, according to Chinese banking sources, may well be gold. An indication of the huge amounts involved can be gained from the wealth of Abu Dhabi, Saudi Arabia, Kuwait and Qatar who together hold an estimated $2.1 trillion in dollar reserves.

That means significantly greater demand for gold may be on the horizon. If these "Chinese banking sources" are right. How far on the horizon is an entirely different question. Keep in mind that this transformation isn't likely to take full effect before 2018. If this article is trying to imply that these participating states will buy their gold with dollars, that will only serve to weaken the dollar further and push up the value of gold even more.

I also subtitled this post 'Ron Paul was right.' First of all, Ron Paul is a huge gold bull so there's that. More importantly, Ron Paul has publicly spoken about the oil-dollar relationship for a long time and he warned us that something like this was unavoidable quite a while ago.

Realizing the world was embarking on something new and mind-boggling, elite money managers, with especially strong support from U.S. authorities, struck an agreement with OPEC to price oil in U.S. dollars exclusively for all worldwide transactions. This gave the dollar a special place among world currencies and in essence “backed” the dollar with oil. In return, the U.S. promised to protect the various oil-rich kingdoms in the Persian Gulf against threat of invasion or domestic coup. This arrangement helped ignite the radical Islamic movement among those who resented our influence in the region. The arrangement gave the dollar artificial strength, with tremendous financial benefits for the United States. It allowed us to export our monetary inflation by buying oil and other goods at a great discount as dollar influence flourished.

This post-Bretton Woods system was much more fragile than the system that existed between 1945 and 1971. Though the dollar/oil arrangement was helpful, it was not nearly as stable as the pseudo–gold standard under Bretton Woods. It certainly was less stable than the gold standard of the late 19th century.

During the 1970s the dollar nearly collapsed, as oil prices surged and gold skyrocketed to $800 an ounce. By 1979 interest rates of 21% were required to rescue the system. The pressure on the dollar in the 1970s, in spite of the benefits accrued to it, reflected reckless budget deficits and monetary inflation during the 1960s. The markets were not fooled by LBJ’s claim that we could afford both “guns and butter.”